Lessons in Scaling Companies

Executives often mistake the concept of scaling companies by only growing revenue and then worrying about the rest later. Scaling revenue sits inside a larger framework for scaling a company. In reality, you need both to win and without revenue, scaling the company is irrelevant. However, if you scale revenue without installing the rest, the company will implode so save yourself the heartache. Let's discuss how to do both and succeed.

Story 1 | Retrofitting Company Scale

A fast-growing SaaS company has first mover advantage and is growing fast. However, now it has embarked on a growth-by-acquisition strategy and it is multiplying its hypergrowth. How does it sustain itself?

Challenges

The core company is hiring at a rate of 100% headcount growth.
The company is simultaneously doubling headcount by acquisition.
The executive team is spread thin and struggling to maintain cultural cohesion and focus on company goals.

Assessment

Multiple company cultures present in the same organization is causing conflict and confusion.
No central reference point for company goals or performance.
New acquisitions do not have a firm foundation to land in the core company leading to uncertainty and attrition.
New staff onboarding is heavily reliant on tribal knowledge transfer. Without a strong HR onboarding program, new staff feel lost and unattended leading to attrition and worse, poor performance.

Execution

Based on our assessment, we recommended and implemented the Entrepreneurial Operating System (EOS) along with centralized management software specifically designed for EOS.

Hired certified/experienced EOS implementor to provide executive training and alignment.
The EOS system was configured and implemented with the executive team for a full quarter to catalyze the leadership team on the new process.
The EOS software chosen provides a common meeting cadence, a companywide method for developing company goals that tie together departmental and individual performance goals by quarter and year, and a companywide scorecard.
In subsequent quarters, the core company rolled out the EOS system to each department and employee.
As acquisitions were closed, the process was repeated for each company to provide a well-defined foundation for transitions.

Results

Company goals were widely distributed and accessible to all employees.
100% of employees consistently received quarterly and annual reviews tied to their individual contributions to company goals.
All employees had real-time access to company performance and health.
Cross-company communications were automated so that one department was aware of issues and decisions from another. Silos were collapsed.
90-day acquisition plans were accelerated due to a common operational cadence.

Lessons

Start with leadership. Without strong adoption and support from the leadership team, don't bother pushing it further across the organization.
No exceptions. Don't let a department quietly opt-out. If you have one silo, the rest becomes a house of cards.
Empower HR. The process starts with the executive team but the day-to-day belongs to your HR team. If they don't have your backing, the departmental managers will revert to their way of doing things.
People do what you inspect, not what you expect. Humans revert to what is easy more than they do what is best for their health. If you don't regularly inspect and hold the bar, expect entropy and chaos to infiltrate your company.